Does more trade = more income? Realistic expectations. becoming a risk manager

Summary

In this video, the host addresses a common misconception among new traders: that more trades equate to more income. Emphasizing the importance of patience and risk management, the host shares insights from experienced traders who prioritize quality over quantity in trades. Highlighting the pitfalls of overtrading and the necessity of understanding market conditions, the video encourages traders to develop a discerning eye for high-probability setups and to avoid the cycle of revenge trading that often leads to account depletion.

Takeaways

• 📈 Trading more does not necessarily equate to more income; it often leads to more risk and potential losses.
• 🧐 Beginners often misunderstand the nature of the market and believe that increased trading frequency will lead to higher profits.
• 🤔 The key to profitability is understanding and practicing patience, waiting for the right trading setups to appear.
• 📉 More trades can lead to a deeper drawdown, making it harder to recover and potentially resulting in more losses.
• 🌐 A member from China suggests that more trades could equal more losses, highlighting the risk of overtrading.
• 🛑 Risk management is emphasized as a crucial skill for experienced traders, prioritizing safety over the pursuit of profits.
• 🚫 Learning when not to trade is as important as knowing when to trade, which is a skill that comes with experience and discipline.
• 🔍 Traders need to develop a good filter to discern high-probability environments from low-probability ones to increase their chances of success.
• 📊 Each trading strategy or pattern has specific conditions under which it performs best; understanding these is vital for effective trading.
• 💡 Being an experienced trader involves looking at the market from a risk perspective and focusing on setups that offer a slight edge in probability.
• 🌟 A trader from Hong Kong exemplifies success by securing significant funding through consistent profitability, emphasizing the importance of patience and risk management.

Q & A

Does trading more frequently necessarily lead to more income?

No, trading more frequently does not necessarily equate to more income. It can lead to more risk and potentially more losses, especially if the trades are not well-considered or are taken in suboptimal market conditions.

What is the common misconception among new traders about trading frequency and income?

The common misconception is that if they trade more, they will make more money. New traders often believe that higher trading volume directly correlates with higher income without considering the quality of trades and market conditions.

What is the key to becoming a consistently profitable trader according to the video?

The key to becoming a consistently profitable trader is understanding how to not trade. It involves having the patience and discipline to wait for the right setup and recognizing suboptimal conditions to avoid trading.

What is the importance of risk management in trading?

Risk management is crucial in trading as it prioritizes the trader's capital preservation. It helps in making informed decisions to avoid unnecessary risks and ensures long-term profitability.

Why is it essential for traders to have a good filter for identifying trading opportunities?

A good filter helps traders identify high-probability trading opportunities. It prevents them from taking trades in low-probability environments, thus reducing the chances of losses and increasing the overall success rate.

What does the speaker mean by 'trading at key levels'?

Trading at key levels refers to entering trades at specific price points where there is a higher likelihood of other traders making similar decisions, potentially leading to a decisive price movement in one direction.

How does the speaker define a 'struggling trader'?

A struggling trader is someone who is caught in a cycle of making money, experiencing heavy drawdowns, blowing their account, and then repeating the same pattern. They often lack proper education and fail to understand when to stop trading.

What is the role of education in avoiding the cycle of a struggling trader?

Education plays a vital role in breaking the cycle of struggling trading by providing traders with the necessary knowledge and skills to make informed decisions, manage risk, and understand market conditions.

What is the significance of the '1 Percentage Trade Club' mentioned in the video?

The '1 Percentage Trade Club' is a community where traders discuss and share insights on trading strategies and experiences. It aims to foster a supportive environment for traders to learn and improve their trading skills.

How does the speaker suggest traders should approach trading in a range-bound or choppy market?

The speaker suggests that traders should be cautious when trading in a range-bound or choppy market, as overtrading in such conditions can lead to losses and a loss of confidence. It's important to identify high-probability setups and avoid trading in suboptimal conditions.

What is the main reason the speaker gives for traders losing money or struggling?

The main reason given for traders losing money or struggling is not the lack of knowledge on how to trade, but rather the lack of proper education on risk management, trading psychology, and understanding market conditions.

Outlines

00:00

📊 The Misconception of Trading Frequency and Profitability

The speaker addresses a common misconception among new traders that more trades equate to higher income, which is often not the case. They emphasize the importance of patience and waiting for the right trading setup rather than trading frequently. The speaker shares insights from their trade club members, highlighting that more trades can lead to more risks and potential losses. They stress the need for risk management and the ability to discern high-probability trading conditions. The speaker's experience of six years in trading and making over seven figures is used to illustrate the point that profitability comes from knowing when not to trade, rather than constantly seeking new trades.

05:00

🌐 The Importance of Realistic Expectations in Trading

In this paragraph, the speaker discusses the importance of having realistic expectations in trading and how many traders struggle due to a lack of proper education. They mention a member from Hong Kong, Horas, who secured significant funding within a month of joining the trade club, illustrating the power of patience and proper trading setups. The speaker explains that successful trading is about understanding the odds and managing risk, rather than hoping for immediate profits. They also touch on the cycle of struggling traders who experience gains and losses, often due to poor risk management and emotional trading. The speaker advocates for ongoing education and sharing of lessons within their trade club to ensure traders are well-informed and can make educated decisions in the market.

Keywords

💡Risk Management

Risk management is the process of identifying, assessing, and prioritizing potential risks to minimize or avoid negative impacts. In the context of trading, it's crucial for maintaining the stability of a trader's portfolio. The video emphasizes that experienced traders prioritize risk management over the number of trades, as it helps in making informed decisions to avoid unnecessary risks and potential losses, as mentioned when discussing the importance of not trading in suboptimal conditions.

💡Beginner Trader

A beginner trader is someone who is new to the market and may have unrealistic expectations about trading outcomes. The video script highlights that many new traders mistakenly believe that trading more frequently will lead to higher income, which is a common misconception that the video aims to dispel by emphasizing the importance of patience and waiting for the right trading setups.

💡Unrealistic Expectations

Unrealistic expectations refer to the belief that one can achieve extraordinary results without considering the inherent risks and complexities of a particular activity, such as trading. The video points out that many new traders have such expectations and may not yet understand the nature of the market, which can lead to poor decision-making and financial losses.

💡Profitability

Profitability in trading is the ability to generate a consistent income from trading activities. The video discusses how true profitability is not about the frequency of trades but rather about the quality and timing of those trades. It suggests that understanding and practicing good risk management are key to achieving long-term profitability.

💡Patience

Patience in the context of trading means waiting for the right opportunities to trade rather than rushing into every potential opportunity. The video emphasizes the importance of patience as a critical factor in successful trading, as it allows traders to avoid bad trades and focus on high-probability setups.

💡Drawdown

A drawdown in trading refers to a decrease in the value of a trading account, often resulting from a series of losses. The video script mentions the dangers of a deep drawdown, where a trader might dig themselves into a hole that is increasingly difficult to climb out of, highlighting the importance of managing risk to prevent such situations.

💡Struggling Trader

A struggling trader is someone who consistently faces difficulties in achieving profitability in the market. The video describes the cycle of a struggling trader, who might experience temporary success followed by significant losses, often due to poor risk management and a lack of discipline in trading.

💡High Probability Environment

A high probability environment in trading is a market condition where the likelihood of a successful trade is higher. The video encourages traders to develop the ability to detect such environments, as trading in these conditions can increase the chances of making profitable decisions.

💡Risk-Reward Ratio

The risk-reward ratio is a comparison of the potential loss versus the potential gain on a trade. The video script implies that traders should consider this ratio when making trading decisions, aiming for trades with a favorable risk-reward ratio to ensure that the potential gains outweigh the potential losses.

💡Consistency

Consistency in trading refers to the ability to maintain a stable and reliable approach to trading, which can lead to long-term profitability. The video suggests that becoming a consistently profitable trader involves not only having a good strategy but also understanding when not to trade and managing risk effectively.

💡Education

Education in the context of trading refers to the knowledge and skills necessary to make informed decisions in the market. The video stresses the importance of proper education for traders, as it helps them to avoid common pitfalls and to develop a realistic understanding of the market, which is essential for long-term success.

Highlights

Trading more does not necessarily equate to more income; beginners often misunderstand the nature of profitability.

Experienced traders agree that more trades lead to more risk, potentially resulting in losses.

Patience is key in trading; waiting for the right setup can be more beneficial than frequent trading.

Being in a deep drawdown can make it harder to recover and highlights the importance of risk management.

New traders often focus on taking more trades without understanding the importance of quality over quantity.

Risk management is prioritized over profit maximization for long-term success in trading.

Knowing when not to trade is a skill that distinguishes consistently profitable traders.

Traders should develop a good filter to identify suboptimal trading conditions and avoid them.

Understanding market conditions such as trending, ranging, or balanced markets is crucial for successful trading.

Each trading strategy or pattern has its optimal conditions for performance.

Overtrading in mid-range markets can lead to losses due to price fluctuations.

A trader's ability to detect high versus low probability environments is essential for success.

Trader Horas from Hong Kong exemplifies success by securing significant funding through disciplined trading.

Controlling the setup and risk management can tip the odds in a trader's favor.

Trading at key levels increases the likelihood of price movements in one direction.

Struggling traders often repeat a cycle of making money, experiencing drawdowns, and revenge trading.

Proper education is vital to break the cycle of struggling and to understand realistic trading expectations.

The speaker emphasizes the importance of ongoing education for traders within their trade club.

Transcripts

hey Traders welcome back to another

video so earlier one of my trade club

members he he asked me hey you does more

trading equals to more income so does

that mean if I trade more means I'll

potentially make more money I know for

majority of beginner Trader especially

if you're new to the market and they're

full of unrealistic expectation they

have yet to know what was an natur in

the

market for those people or if you

watching this you currently at a phase

where you think if I trade more I'll

make more money if I trade at lower time

frame I'll make more

money I believe it is just a

misunderstanding and you have yet to

know what real profitability

is if you look at my my telegram right

now this is a conversation that we had

earlier I actually one of my members ask

me this question so I actually post it

inside my the 1 percentage trade club

and I ask the rest of the member and I

say hey I was having a conversation with

one of our trailers and it brought up a

topic of no trade equals to no income

how do you all think about that and why

is essential to be extremely patient and

wait for the right setup to appear does

more trade equals to more income and if

you look at all the answers right it's

really interesting you see more trade uh

equals to more risk potentially lose

money uh if we are if we taking bad

trades it will lower it will result in

lower probability in the long run

basically just think of a scenario where

you're in a deep draw down and you're

just digging deeper hold for yourself to

climb out of that and then one of our

members from China he said that uh maybe

more trade equal to more losses and my

response to that was very

simple I basically said I believe

majority of experienced Trader would

agree that more trade equals to more

risk and if we hold on

here this is completely the the the

complete opposite of what majority of

new Traders think or struggling Traders

think the struggling Traders they are

they have all of the attention focused

on to how can I take more trade how can

I get involved in the market every

single day how can I strategy hopping to

make sure I find Holy Grail and they

always think oh more risk equals to more

profit not necessarily because you

know the way I look at the market after

six years of trading and after having

made over seven

figures is essentially I put risk at the

Forefront it is always my prior priority

to become a risk manager it's easier say

than to be done but I'll tell you very

honestly if your goal is to become a

consistently profitable Trader you first

need to know how to not trade

and having the patience having the

discipline to know and having the

experience to tell hey this is a subop

optimal condition or the right now the

market condition is not as high

probability as I thought it was I need

to step back a little bit I need to stop

trading only when you start having a

good filter a good eye on telling when

is the time where you shouldn't trade

then you will become a good Trader

because majority of Traders what do you

think they do they they go into the

market and they start looking for trade

do you think they will ever take a step

back and really ask thems what are some

of the filters what what what's my

filtering and select uh select P

selection process what's some of the

criteria that I needs to I need to take

off to even tell me if the market right

now is trending or is it uh in a Min

reversion environment or is it on a

balanced Market or is it ranging so you

need to have the ability to detect a

high probability versus a low

probability environment then you can you

just make things a lot easier and when

you trade your setups each setups that

you take or each of the strategy or

pattern that you trade they each have

different condition where that where

where where they perform the best and if

you can't tell that very likely you are

just taking a piece of puzzle putting it

at the wrong spot so no matter what you

do it just seems like nothing's working

and that's why you you just keep losing

money all right so being an experienced

Trader is all about looking at things

from a pure risk P perspective like what

I say being a risk manager and each

trade you take if you only focus on more

income then very likely you are only

reading one side of the story all right

a good A+ condition that you should

press hard the rest of the time just

chill when the market condition is not

as good it's a little bit poor why do

you trade because you know very likely

you lose money unless you don't know

that is a suboptimal trading trading

condition or environment to trade all

right it's all down to your

understanding all right and there it

says that uh one of our um one of our

members Horas um if you follow our

public Channel you probably know I talk

about him he's actually from Hong Kong

and within one month of joining our

trade Club this Horus this Trader from

Hong Kong have passed two valuation he

secured 300,000 in funding in total on

his Futures profit right I will say

waiting a losing outcomes beyond your

control yes agree with that because

every single trade is like coin flip but

what makes what gives an an edge as a

profitable Trader is we know if this is

this setup is giving me a slight higher

probability of success even if it's just

60% in the long run it's a big figure

it's all about the long-term game you

know what you can control are your setup

and risk management which can ta the

odds into your favor trading at key

levels increases the likelihood of other

Traders making similar decisions and

potentially moving prices decisively in

One Direction when there is a common

ground in an upward or downward Trend

you can make the most easiest money

based on your risk Port tray trading in

the mid-range still offers profit

potential but you have to face price

fluctuations during consolidation or

choppy markets over trade losing money

and confidence are easy to occur in this

kind of situation just just lots of just

lots of conversation and if you look

at uh this one right if you uh

just this one haras he just passed the

second evaluation right hitting 9k

profit Target secure his second

evaluation account and that's why uh all

of the people in trade Club not just all

of the the Traders within my trade club

and to all of you if you're watching

this video it is really important to

have a realistic expectation and

majority the main reason why some of you

are losing money or are struggling it

isn't because you don't know how to

trade I tell you technical

analysis this is probably the easiest

thing to to handle all right if you talk

about having a strategy that works it's

the easiest thing but why do you think

you keep struggling and you keep losing

money all right you you uh let me tell

you this the the loophole or the cycle

of a struggling Trader you make a bit of

money you think you're doing well and

then one a few bad days you go into

heavy draw down you blow your account or

you blow multiple challenges you stop

trading for a little bit you come back

to the market feeling really motivated

then you perform well for a little bit

guess what a few bad days you go back

into the cycle of tail trading Revenge

trading blowing account blowing

challenges or being multiv it again and

you just keep repeating the same cycle

over and over and over again and that's

the scariest part about traders who are

always struggling because they just

don't know when to pull the handbreak is

it their fault is it your fault if

you're watching this video and even

struggling no it's because you have not

received a proper education and that's

why within our trade Club I always tell

all of them every single week no matter

how busy that I am I'll always try try

my very best to make sure I put up one

to two new lessons and the main reason

why I do that is because I want to make

sure all of the Traders within our trade

Club are well educated and they're well

informed you see just by today we got

lots of lessons um again I'm not posting

all the lessons today and yesterday just

because of this video it's just

coincidentally we were having a

conversation within our trade Club you

see two filters to preempt a slow messy

Market reving Trad uh Traders Journal

three conditions are avoid trading entry

confirmation is it good or bad trades

review more trades review more lesson

More lesson you see every single week we

probably have two to three or even four

or five this week the goal is

again I want every single person even if

you're not within the one personage

trade C I want every single Trader right

now as long as you go through my channel

if you just pass by you know what real

trading is full of realistic expectation

you know trading is not easy you know

it's going to take time and yeah just be

realistic and that's pretty much it um

for lesson today if you like the video

please don't forget to like sh And

subscribe let me know in the comment

section below what would you like me to

talk about next and I'll talk to you

next time bye-bye